Pending Sales Down

The Pending Home Sales Index (PHSI), a forward-looking indicator based on signed contracts, decreased 0.8percent in February to 93.9 from a downwardly revised January level of 94.7. The PHSI now has declined eight straight months, and is at the lowest level since the 92.2 reported in October 2011. The February 2014 PHSI reported by the National Association of Realtors (NAR) was 10.5percent lower than the same period a year ago.

The February PHSI increased in the Midwest and West by 2.8percent and 2.3percent respectively, and fell in the Northeast and South by 2.4percent and 4.0percent respectively. All regions fell year-over-year, ranging from 7.4percent in the Northeast to 16.5percent in the West.

Recently, Census reported a 3.3percent decrease in February new home sales. For the second consecutive month, the unusually severe winter has slowed the housing market. However, the growth in household formations and strong pent-up demand will move the market forward later this year. The downward slide in the PHSI indicates existing home sales will remain flat over the next two months.